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Climate Action Could Boost Global GDP by 0.2% by 2040, Report Says

Wednesday, 26 March 2025 13:22
Climate Action Could Boost Global GDP by 0.2% by 2040, Report Says

(Ecofin Agency) - The battle against climate change is not just about preventing catastrophic impacts on ecosystems and human life; it also presents a significant opportunity for medium- and long-term economic growth. This is the finding of a new report by the OECD and UNDP. They believe that stronger efforts to tackle climate change could add 0.2% to global GDP by 2040, which is roughly equivalent to the GDP of Sweden.

The report, titled Investing in Climate for Growth and Development - The Case for Enhanced NDCs, was released following the 16th Petersberg Climate Dialog in Berlin, which took place from March 25 to 26. The event, attended by delegates from 40 countries, is seen as a key step toward preparing for COP30, the upcoming global climate summit in Belem, Brazil, in November.

Nearly a decade after the landmark COP21 in Paris, the report highlights that countries are still struggling to meet their climate commitments. Specifically, the authors point out that many nations have yet to present their Nationally Determined Contributions (NDCs) — the pledges to help limit global warming to 1.5°C. While these NDCs were supposed to be submitted by February 10, only 13 out of 175 countries have met the deadline.

Despite these setbacks, the report argues that nations would benefit from maintaining high climate ambitions and accelerating action. Projections show that if countries renew their commitments in line with the Paris Agreement goals, they could reduce climate-related risks, avoid costly damages, and boost the global GDP by 3% by 2050, and by 13% by 2100.

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Beyond the economic benefits, the authors also stress that such efforts would be a significant step toward a low-carbon economy. Currently, the world emits 0.34 kg of CO₂ per dollar of economic output. However, under an optimistic scenario, this carbon intensity could drop by more than half, to just 0.14 kg by 2040.

"Investing in clean energy and energy efficiency increases productivity and innovation, balancing the economic impact of policy constraints on prices and consumption," the report explains. "Reinvesting carbon revenues can further boost GDP while ensuring a just transition and securing public support for climate policies".

On the other hand, the authors warn that political uncertainty can hinder investment and slow growth. Unclear policies could delay private sector investments and reduce global GDP by 0.75% by 2030.

This report comes at a time when global climate engagement appears to be slipping, particularly with the second withdrawal of the U.S. from the Paris Agreement. As the world’s second-largest emitter of CO₂, behind China, the U.S. accounts for nearly 15% of global emissions. The question now is whether this report will reignite international commitment to tackling climate change in the coming months.

 
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